PENGU has been underperforming in the past day, recording the biggest loss among the top 100 cryptocurrencies after sliding 11%, according to CoinMarketCap.
Conditions like this often imply that the possibility of further decline remains high. However, recent sentiment suggests bulls could step in soon and a rebound may be near.
Liquidity flight pressures PENGU
Pudgy Penguins [PENGU] witnessed one of the largest capital outflows from its derivatives market, where investors use leverage to increase their chances of gains.
Open Interest, which helps determine the amount of capital in the market, shows a 19% decline, with about $15.4 million removed from circulation.
The drop in capital, paired with the accompanying price depreciation, aligns with the broader indication that a bearish sentiment is brewing.
In fact, data shows the market is pushing bullish investors to the losing end as sentiment turns against them. Liquidation figures confirm this, wiping out nearly $1 million in bullish long positions in recent days.
Technically, the Long/Short Ratio stood at 9.9 to 1.1 in the past days, meaning the market forcefully closed $9.9 worth of long contracts for every $1.1 in short liquidations.
Rebound could be near
Capital outflow in the market has not occurred across all exchanges.
Binance, which controls the largest Open Interest at $22.7 million in PENGU, displays a different pattern that suggests a stronger bullish sentiment.
The Long/Short Ratio, which tracks the amount of buying volume relative to selling volume, shows that buying activity has dominated in the past day.
A Long/Short Ratio above the neutral zone of 1 confirms this positive sentiment. Currently, ratio data sits at 1.6—significantly high and reinforcing the bullish outlook.
The general sentiment in the derivatives market is bullish as well. The Open Interest-Weighted Funding Rate has turned positive, posting a reading of 0.0082%.
This indicates that most of the capital circulating in the market is coming from long investors paying a premium fee, which further confirms bullish sentiment.
Spot markets are also bullish
Binance derivatives investors aren’t the only bullish participants in the market. Other investor segments across the broader market reflect the same sentiment.
Spot exchange netflow data shows consistent accumulation in the past 48 hours, amounting to about $2.26 million.
Most of the accumulation occurred on the 10th of December, when investors purchased more PENGU, scooping $1.76 million from the market.
With $509,000 in PENGU accumulated so far today, the likelihood remains high that if bullish interest continues, total purchases could exceed the previous day’s accumulation.
For now, the overall sentiment appears to reflect a brief retracement before PENGU continues its upward trajectory.
Final Thoughts
- PENGU records a massive decline following significant liquidity flight from the derivatives market.
- Binance bulls are stepping in, backed by other investors, according to indicators.
